A detention centre near Bicester for illegal immigrants and asylum seekers would create almost 500 jobs if approved.

The centre, which is being proposed for Ministry of Defence-owned land at Arncott, could open by 2012 and hold up to 800 detainees.

The UK Border Agency said 488 jobs would be created in roles including security, administration, catering and cleaning. Bicester Chamber of Commerce spokesman Ben Jackson said: "In the current economic climate, we would have to welcome the creation of new jobs and additional customers for the traders of Bicester."

But small business leaders have warned about the impact of so many extra jobs on the area.

Barry Wheatley, chairman of the Oxfordshire branch of the Federation of Small Businesses, suggested some firms in the area could struggle to find staff.

He said: "Clearly, on the surface of things, this sounds like it could have large benefits for the town.

"But this just shows a lack of understanding by the powers that be of the nature of the problems small businesses face in a place like Oxfordshire.

"It already has one of the lowest unemployment rates in the country. Creating so many new jobs could exacerbate the problems for small businesses wishing to take on staff."

About 170 people attended an exhibition on the agency's proposals, held at Arncott Village Hall last weekend. Most people expected the centre to go ahead, but were concerned about security at the site and extra traffic on nearby roads.

Susan Henderson, of Weirfarm Close, Blackthorn, said: "I asked, will it be secure? Traffic through Blackthorn is an issue. We need to reduce the traffic through the village."

Mark Hide, 42, of Thame Road, Blackthorn, said: "Why not hire more people at the borders and stop people coming into the country in the first place?"

An earlier plan to build a centre at the site to house 750 asylum-seekers was abandoned in 2005, after a campaign by local residents.

Sarah-Louise Johnston, 34, of Mulberry Drive, Bicester, said: "I believe detention is inhumane. I opposed the plans the first time round and I oppose this."

If the centre goes ahead, it would be built to the same standards as a category C prison, with a 5.2-metre high fence around the perimeter, topped with wire.

A UK Border Agency spokesman said: "The visual impact would be low. This would be a development that would be virtually invisible. You would have to be going there to know it was there."

A planning application is expected to be submitted to Cherwell District Council next month.

Norman Bolster, the council's executive member for economic development, said: "We welcome the possibility it could bring jobs to the area and any economic advantages that would be associated."